texas funeral planning: why you should consider including it in your estate plan

Estate Planning and Special Needs Trusts

TEXAS FUNERAL PLANNING

– WHY YOU SHOULD CONSIDER

INCLUDING IT IN YOUR ESTATE PLAN

“In order to understand why estate liquidity is so important it helps to better explain what is meant by the term and

what happens when an estate plan lacks liquidity.”

STEPHEN A. MENDEL Houston Texas Estate Planning Attorney

http://www.mendellawfirm.com/estate_planning/estate-planning

Texas Funeral Planning – Why You Should Consider Including It in Your Estate Plan www.mendellawfirm.com

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A well thought out estate plan should include far more than just

instructions for the division of your estate assets upon your death. The

additional components you choose to include in your estate plan will

typically depend on your unique needs, objectives, and concerns; however,

estate plan could benefit from a funeral planning component.

Like most people, the idea of planning your own funeral and burial may not

sit well with you when you first consider it but after you realize the

numerous advantageous to incorporating a funeral plan into your estate

plan you may agree that your estate plan should have one.


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HOW PLANNING AHEAD BENEFITS EVERYONE

According to the National Funeral Directors Association, the average

funeral costs around $6,600. Cemetery services will cost another $3,000,

on average, bringing the

total cost to around

$10,000 for the average

funeral and burial. Of

course, funeral directors

will try and get your loved

ones to spend more than

that by stressing the

importance of the entire

affair. Your loved ones, in

turn, will be emotionally

vulnerable and easily

swayed because they are not thinking clearly in the immediate aftermath of

your death. This can be a costly combination. Your family could end up

spending upward of $20,000 on a funeral and burial that you didn’t even

want. That’s right, don’t forget that if you failed to include funeral planning

in your estate plan all the money could be spend on an elaborate funeral

and burial service that isn’t even what you would have wanted since no one

knows what you would have wanted.


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All in all, including a funeral plan in your comprehensive estate plan may

benefit you and your loved ones in the following ways:

Ensures your wishes will be honored with regard to the type of

funeral and burial/cremation that follow your death.

Ensures that your loved ones will not be taken advantage of by

funeral directors.

May pre-determine the expenses associated with your service.

Allows you to arrange for the funding for your funeral and service so

your loved ones do not have to scramble to come up with a large sum

of money right after your death.

Decreases the chance of conflict among family members as often

occurs when there is disagreement about what the decedent would

have wanted.

Ensures that you will be buried where you wish to be. Waiting until after

death could mean space is not available in your preferred location.


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WHAT DECISIONS CAN BE MADE NOW?

Now that you have decided to plan ahead by including funeral planning in

your estate plan, you need to consider what decisions can be made now.

Depending on what method you use for funding your service, just about all

of the decision can be made now, including:

Whether to be cremated or buried.

Where to be buried or where to scatter ashes.

What type of memorial service to have – formal service, small

gathering, or an Irish wake, for example?

Open casket or closed?

Who will preside over the ceremony?

Who will speak at the service?

Who will be the pallbearers?

Flower and music choices


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USING A DESIGNATED ACCOUNT

If you have decided to create a funeral plan you will need to decide how to

fund your plan. There are

several ways to accomplish

this, with creating a

designated account being

the simplest. If you choose

this method you will open a

bank account into which

you will deposit sufficient

funds to cover the cost of

your funeral and burial. You

will need to arrange for the

person you wish to be in

charge of making

arrangements to have

access to the account.

Although this method is

simple, there are a number

of disadvantages to using a

designated account,

including:

The account could be inaccessible because of the probate of your

estate


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The individual you designate to have access to the account could

predecease you, become incapacitated, or otherwise be unavailable

when the time comes.

You have no legal guarantee that the account funds will even be used

for your funeral.

You have no guarantee that your wishes with regard to the details of

the service will be honored.

As long as the account remains in your name the funds are potentially

accessible by creditors

The funds in the account could disqualify you for much needed assistance

such as Medicaid or SNAP benefits during your retirement years.


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ARE PRE-PAID FUNERAL CONTRACTS A GOOD IDEA?

Another option is to enter into a pre-paid funeral contract. The primary

advantages to this method

are that the entire funeral

and burial can be paid for

now and that you have the

ability to make all the

decisions yourself with

regard to the funeral and

burial. There are, however, a

number of important

disadvantages to entering into a funeral contract, including:

The funeral home could be sold, go out of business, or wind up in

bankruptcy proceedings.

The “escape clause” often included in the contract may allow the

funeral home to require your loved ones to pay additional costs

because of increased cost of materials and/or inflation. In short, your

“pre-paid” funeral might not really be pre-paid.

You are locked into all the choices and conditions contained in the

contract. If you change your mind about wanted to be buried, for

example, you may have to pay a fee to have that change reflected in

the contract – assuming you can make changes at all.

You could move, making the entire contract potentially worthless if you no

longer want to have your funeral and burial in the area where the funeral

home is located.


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CREATING A FUNERAL TRUST

An option that addresses many of the disadvantages of using a designated

account or a pre-planned funeral contract is creating a funeral trust

agreement. A funeral trust

operates, in principal, the

same as any other trust

agreement. You will need to

name a Trustee who will be

in charge of administering

the terms of the trust.

Those terms are where you

will express your wishes

with regard to the funeral

and burial. The Trustee is

legally obligated to abide by

those terms, ensuring that

your wishes will be

honored. You should also

name at least on successor

Trustee in the event your

original Trustee is unable or

unwilling to serve.

Funding your trust can be accomplished in one of two ways. You can

directly fund the trust by simply transferring assets into the trust now or

prior to your death. Another popular option, however, is to fund the trust

with a life insurance policy. You name the trust as the beneficiary of the


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policy, whereupon the policy proceeds will be paid out into the trust

immediately following your death. One crucial benefit to using this option

is that the trust avoids probate and there are no assets in your name at the

time of your death to be subject to gift and estate taxes. In addition, you

have the flexibility to

change the terms of the

trust at any time should

you move to another state

or simply change your

mind about an aspect of

the funeral or burial.

If you now see the benefits

gained from including

funeral planning in your

estate plan you should take the time to discuss adding a funeral plan to

your comprehensive estate plan with your Texas estate planning attorney.

Federal Trade Commission, Planning Your Own Funeral

Fox Business, 10 Facts Funeral Directors May Not Tell You

Findlaw, Funeral Planning FAQ

NOLO, Planning Your Funeral or Memorial Service

http://www.consumer.ftc.gov/articles/0305-planning-your-own-funeral

http://www.foxbusiness.com/personal-finance/2013/04/11/10-facts-funeral-directors-may-not-tell/

http://estate.findlaw.com/planning-an-estate/funeral-planning-guide-faq.html

http://www.nolo.com/legal-encyclopedia/planning-funeral-or-memorial-service-29879.html


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About the Author

Stephen A Mendel

Stephen A. Mendel is a member of the American Academy of Estate

Planning Attorneys, a national organization that serves the needs of legal

professionals whose practices focus on estate planning and asset

protection. The Academy fosters excellence among its members and helps

them deliver the highest possible service to their clients. Stephen A. Mendel provides a

broad spectrum of strategies and planning tools that can accomplish very diverse goals.

Mr. Mendel is an attorney who focuses a substantial part of his practice on estate

planning. Mr. Mendel’s guiding principle is to provide his clients with quality legal

services tailored to each client’s specific needs and goals.

Mr. Mendel has been providing quality estate planning for Houston and surrounding

area clients for many years. His firm helps numerous people who are concerned about

protecting their families from the devastating legal effects of disability and death. The

aim of the firm is to help you accomplish your estate planning goals and to take the

mystery out of the planning process.

Specific services include, but are not necessarily limited to, design and preparation of

wills & trusts, asset protection, use of family limited partnerships as part of the planning

process, buy-sell agreements, business counseling, and succession of closely held, family

owned businesses.

The Mendel Law Firm, LP 1155 Dairy Ashford Suite 104 Houston, TX 77079 Phone: (281) 759-3213 Fax: (281) 759-3214 www.mendellawfirm.com

http://www.mendellawfirm.com/estate_planning/estate-planning